Having access to bank accounts is still a distant dream for many in the developing countries. It should not therefore be surprising at all that about 50% adults in developing countries are still denied of the basic financial services. Financial inclusion is the primary condition to ensure economic development and poverty eradication. Unfortunately, the developing countries are still not able to ensure it.
However, the emergence of digital finance is set to change things and make financial services more accessible to the majority of people. The mobile banking system is a true game changer that can ensure maximum reach of financial services to the remotest parts of countries and can be a big step in the drive against poverty. The role of digital finance in alleviating poverty has been discussed in this post.
Bringing more people within the ambit of financial services
In order elevate people from the depths of property it is extremely important that financial services are made available to all. This is what is called financial inclusion. When people have access to the financial services, they can make use of the opportunities to find ways out from poverty. Digital finance, especially the feature of using mobile devices for financial transactions has opened up new doors for financial inclusion.
Making digital technology available to all
The thrust should therefore be on spreading digital technology so that it is available to everyone. It would ensure that economic opportunities are made available to all. While computers are yet to penetrate deep into the countries, mobile phones have much wider reach as numbers would reveal. There are more than 90% mobile users in China and Russia while in Mexico it is about 61%. However, all mobile phone users do not have the internet facility but it has to be ensured that not a single person remains without an internet connection on mobile phones. This would ensure that mobile money can reach into the hands of all mobile phone owners. Women have to be encouraged to use mobile phones so that they are not left behind in accessing money on mobile devices.
Encourage direct deposits
With the purpose of helping poor people to access good financial services conveniently, electronic payments for salaries/wages to workers as well as payments to suppliers by business houses have to be ensured. This would guarantee that the payments reach the right people as it is directly credited to the accounts. It is heartening to note that the trend is gaining momentum with governments taking the lead. Digital payments are already being made to farmers and sellers of agricultural produce in East Africa.
Tailor made financial products
Digitising financial transactions have to be duly supported by lowering financial costs through offering cheaper accounts and providing user friendly financial products that are better than the traditional ones. Systems have to secured and free from frauds and the infrastructure has to be streamlined so that users are attracted to the convenience. Trust has to be built into the systems through better customer service.
Expanding financial access is the key to success in empowering people financially to eradicate poverty.